Skanska closes on €1.52bn health care project

Swedish construction company Skanska has reached financial close on the contract to design, build, operate and maintain the New Karolinska Solna university hospital to the northwest of Stockholm, Sweden.
 
The contract, worth SEK 14.5 billion (€1.52 billion; $1.86 billion), is the first ever health project in Sweden to be built using the public-private partnership (PPP) model. 

New Karolinska Solna will be financed with a SEK9.4 billion debt package that includes a €300 million loan from the European Investment Bank (EIB) and a SEK1.5 billion loan from the Nordic Investment Bank (NIB).

The rest of the debt package – around €500 million – comes from a club of ten commercial banks, including BBVA, Credit Agricole, DNB NOR, KfW, Lloyds, Mizuho, Natixis, Nordea, Skandinaviska Enskilda Banken (SEB) and Svenska Handelsbanken.

The margins on the debt package start at 210 basis points, go up to 270 basis points and end at 300 basis points. The loan has a tenor of 28.5 years with a cash sweep at year 10. A cash sweep is a mechanism which sifts all of the money an asset generates to repay debt starting from the year it is fixed.

The interest rate risk has been fully hedged via private placements, with SEB acting as the hedge bank.

Skanska, through its Infrastructure Development subsidiary, will invest SEK 600 million into the project company – Swedish Hospital Partners – sharing 50 percent of the total SEK 1.2 billion in equity with partner Innisfree, a UK-based infrastructure company.

The contract – which is the largest in Skanska's history – will be jointly carried out by its Swedish and British construction units with 70 percent allocated to the Swedish subsidiary and 30 percent to Skanska UK.

Construction for the project is expected to start during summer, with the concession lasting for 30 years.